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Hoechst, Rhone reach deal
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May 17, 1999: 10:21 a.m. ET
German, French firms agree on new terms to form $60B life-sciences company
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LONDON (CNNfn) - Germany's Hoechst confirmed its merger with France's Rhône-Poulenc Monday. Revised terms for the deal, including much speedier progress to cementing the alliance, are designed to ease the concerns of major shareholders.
Disgruntled investors had threatened to derail the creation of the world's second-largest life-sciences firm.
The new deal gives Hoechst shareholders a majority stake in the new company, to be known as Aventis, and ends weeks of wrangling that imperiled the deal.
Hoechst shareholders will receive three Rhône-Poulenc shares for every four Hoechst shares they hold, plus a special one-time dividend of 1.5 billion euros ($1.6 billion).
This gives investors in the German company around 53 percent of the merged company. Hoechst also plans to buy back around 5 percent of its shares.
No even split
The original merger terms, first determined last December, had called for an even split between stockholders in the two companies. However, leading Hoechst shareholders argued that their stake was undervalued and launched a campaign to revamp the terms.
The revised deal includes an accelerated timetable the two firms hope to complete by the end of the year. Most of the companies' chemical businesses will be spun off into a new company called Celanese.
The original merger was structured as a two-step process, intended to take up to three years.
Aventis will be based in Strasbourg, France, and with a market capitalization of around $60 billion will rank second behind Switzerland's Novartis in the life-sciences sector.
Hoechst (FHOE) shares climbed 0.80 euro to 41.05 in Frankfurt Monday, while Rhône-Poulenc (PRPP) was down 1 percent at 46.16 euros in Paris. 
-- from staff and wire reports
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Hoechst
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